Northern, Inc. just finished its second year of operations. In the first year it produced 1,000 units and sold 400. The second year resulted in the same production level but sales were 1,200 units. The direct (variable) costing income statements for both years are shown below. YEAR 1 YEAR 2 Sales $ 60,000 $180,000 Variable cost of goods sold $26,000 $78,000 Variable selling and admin 800 26,800 2,400 80,400 Contribution margin 33,200 99,600 Fixed manufacturing overhead 40,000 40,000 Fixed selling and administration 15,000 55,000 15,000 55,000 Operating income $(21,800) $ 44,600 Total production costs for Northern during year 1 were: A. $65,000 B. $66,000 C. $81,800 D. $105,000
Northern, Inc. just finished its second year of operations. In the first year it produced 1,000 units and sold 400. The second year resulted in the same production level but sales were 1,200 units. The direct (variable) costing income statements for both years are shown below.
|
|
YEAR 1 |
YEAR 2 |
||
|
Sales |
|
$ 60,000 |
|
$180,000 |
|
Variable cost of goods sold |
$26,000 |
|
$78,000 |
|
|
Variable selling and admin |
800 |
26,800 |
2,400 |
80,400 |
|
Contribution margin |
|
33,200 |
|
99,600 |
|
Fixed manufacturing |
40,000 |
|
40,000 |
|
|
Fixed selling and administration |
15,000 |
55,000 |
15,000 |
55,000 |
|
Operating income |
|
$(21,800) |
|
$ 44,600 |
Total production costs for Northern during year 1 were:
A. $65,000
B. $66,000
C. $81,800
D. $105,000
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